We develop a dynamic model of trading and investment with limited aggregate resources to study investment cycles …. Unverifiable idiosyncratic investment opportunities imply market prices to play a role of rent distribution, distorting private … investment incentives from a social point of view. This distortion is price-dependent, leading to two-sided inefficient …

be welfare-improving. We find that imposing a penalty helps to improve investment efficiency, but it also brings a … greatest degree, as the benefit from reducing the investment inefficiency outweighs the expected deadweight cost. Otherwise, it …

. Financially constrained firms decide on the level of their liquid resources facing cash-flow shocks and time-varying investment … liquidity and in investment even if technology remains constant, consistently with firm-level and aggregate evidence. These … investment waves are not constrained efficient in general, because the social and private value of liquidity differs. The …

We develop a dynamic model of trading and investment with limited aggregate resources to study investment cycles …. Unverifiable idiosyncratic investment opportunities imply market prices to play a role of rent distribution, distorting private … investment incentives from a social point of view. This distortion is price-dependent, leading to two-sided inefficient …

AbstractPurposeThe purpose of this paper is to investigate whether firm efficiency can explain the investment anomaly …. The investment anomaly refers to the persistent negative relation between firm growth and future risk-adjusted returns … conducts portfolio sorting and Fama–Macbeth regression analyses with three different measures of efficiency and four variables …